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Fire districts put private lawyers on public payrolls

BY SANDRA PEDDIE and EDEN LAIKIN | sandra.peddie@newsday.com
eden.laikin@newsday.com

11:30 PM EDT, July 26, 2008

When Gordon Heights residents mobilized to fight the high taxes they pay for fire service, they were stunned to discover that the fire district's attorney, William Glass, was on the payroll.

They complained that taxpayers in Long Island's most expensive fire district should not pay the Social Security and pension costs of a private attorney who had no office, filed no time sheets and had a private practice. Beginning in July 2007, they contacted one Brookhaven councilwoman, two county legislators and the state comptroller's office through e-mails, phone calls and meetings, demanding action be taken.

They got nowhere.

What residents did not know was that at the same time Glass was listed as an employee at Gordon Heights, records show he was also on the payrolls of six other fire districts, collecting health benefits through one and pension credits from all. It is this very practice that has come under the scrutiny of New York State Attorney General Andrew Cuomo in recent months, in the wake of Newsday's stories exposing the practice of private attorneys being listed as public employees at school and other districts.

In addition, Glass had retainer agreements -- used by independent contractors, not employees -- with all seven of the fire districts. While five of the districts did not pay Glass anything under those agreements, two paid him $25,393 in legal fees even as they were paying him as an employee. Beyond these seven districts, Glass has represented 20 other fire districts in his private practice.

Internal Revenue Service rules differentiate between employees and independent contractors because they are taxed differently. Someone is considered an employee if he or she maintains an office, files time sheets and reports to a supervisor, among other criteria. Independent contractors pay their Social Security taxes but are allowed to write off more business expenses. Employees pay half their Social Security taxes.

A year after residents first complained, little has changed for Glass. One fire district, East Marion, has removed him from the payroll, saying it was an error. The remaining six, including Gordon Heights, have continued their employment arrangements with him. In interviews, Glass said he sees nothing wrong with the practice, in large part because of his own legal research on the same issue.

Gordon Heights residents disagree. They pay an average of $1,500 a year for their fire service -- more than four times the average fire district tax on Long Island, according to state and fire district records.

Civic activist Rosalie Hanson said it was "bad enough" that residents pay the highest fire taxes on Long Island, "but it only adds insult to injury to now learn that we are paying public pensions for private attorneys."

In spite of Newsday's stories, a rare public hearing into the issue and the unanimous passage of pension reform legislation last month by the State Legislature, records show that at least 14 special districts and one authority -- small units of government that handle services such as water hookups and garbage pickups -- are currently reporting private attorneys as public employees.

The measure, which Gov. David A. Paterson has said he will sign, specifically bars any attorney working for a school district or BOCES from being both an employee and an independent contractor. It does not specifically address lawyers working for other public entities, such as special districts. The proposed law would go into effect three months after Paterson signs it.

However, new regulations issued by state Comptroller Thomas DiNapoli state that any attorney, physician, engineer, architect, accountant or auditor who is engaged under a contract or any other agreement is presumed to be an independent contractor and not an employee.

Since 2002, records show, at least nine attorneys have collected more than $2 million in public salaries, plus 1099 payments. Those are used to pay independent contractors.

"Clearly, these guys are tone-deaf and not hearing the public outrage at this issue," said Nassau County Comptroller Howard Weitzman. "They don't want to hear about anybody abusing the system anymore."

Since March, six special districts have removed attorneys from their payrolls in the wake of the Newsday stories, but have allowed them to continue as consultants. Most of the districts have not sought repayment for benefits already paid out, records show.

A municipality has the option of seeking repayment for benefits paid improperly. Currently, for example, Weitzman is seeking repayment for health benefits and pension contributions paid on behalf of an attorney who was reported as a full-time Nassau County employee.

Defending themselves

Gordon Heights activists said they were frustrated at the lack of response when they complained about Glass being on the fire district payroll. County Legis. Jack Eddington (WF-Medford) and Brookhaven Councilwoman Constance Kepert said they told the residents last year the fire district was outside their jurisdiction. Legis. Kate Browning (D-Shirley) said she did not remember residents raising the issue with her.

Kepert said she did get the state comptroller to audit the fire district. That audit, released earlier this year, did not mention Glass' employment. And, residents said, they never got a response from the state comptroller's office. A spokesman for the comptroller, Dennis Tompkins, declined to explain why the office did not act, but said that auditors in the last week have been sent to every fire district that employs Glass.

Glass, and other lawyers interviewed for this story, argue that their arrangements are permissible under the law. One of the nine attorneys interviewed for this story, Frank D'Elia, who has been on the payrolls of two water districts and one sewer district at the same time, said, "I'm 72 years old. I'm not going to lose my mind over something that was perfectly acceptable years ago."